Correlation Between Vulcan Materials and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and Summit Materials at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Vulcan Materials and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials Co and Summit Materials Cl, you can compare the effects of market volatilities on Vulcan Materials and Summit Materials and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Vulcan Materials with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Summit Materials.
Diversification Opportunities for Vulcan Materials and Summit Materials
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vulcan and Summit is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials Co and Summit Materials Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Vulcan Materials is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Vulcan Materials Co are associated (or correlated) with Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Summit Materials go up and down completely randomly.
Pair Corralation between Vulcan Materials and Summit Materials
Assuming the 90 days trading horizon Vulcan Materials is expected to generate 1.27 times less return on investment than Summit Materials. But when comparing it to its historical volatility, Vulcan Materials Co is 1.5 times less risky than Summit Materials. It trades about 0.07 of its potential returns per unit of risk. Summit Materials Cl is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,965 in Summit Materials Cl on August 28, 2024 and sell it today you would earn a total of 2,113 from holding Summit Materials Cl or generate 71.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 92.92% |
| Values | Daily Returns |
Vulcan Materials Co vs. Summit Materials Cl
Performance |
| Timeline |
| Vulcan Materials |
| Summit Materials |
Vulcan Materials and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and Summit Materials
The main advantage of trading using opposite Vulcan Materials and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, Summit Materials can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Summit Materials will offset losses from the drop in Summit Materials' long position.| Vulcan Materials vs. Samsung Electronics Co | Vulcan Materials vs. Samsung Electronics Co | Vulcan Materials vs. Hyundai Motor | Vulcan Materials vs. Toyota Motor Corp |
| Summit Materials vs. Samsung Electronics Co | Summit Materials vs. Samsung Electronics Co | Summit Materials vs. Hyundai Motor | Summit Materials vs. Toyota Motor Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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